2.1 Direct and indirect technology implications

Regulation in the areas listed above is affected by technological development in three different ways. First, there is a direct impact: New technologies lead to the development of new services and modes of delivery unforeseen by existing regulation. Use of IP telephony, for instance, raises new issues with regard to numbering and emergency services. Second new technologies affect the overall market structure and the level of competition by changing conditions for supply, which again affect the need for regulation. An example of this is facility-based competition enabled through the use of cable broadcasting networks for the provision of Internet access. Third, new technological opportunities create a demand for new types of services, which again affect the overall market structure. The two most prominent examples are the introduction of mobile services and the introduction of the World Wide Web. The demand for mobile services created an entirely new market and enabled a number of new entrants providing their services in competition with the incumbent operators. The Internet has been the driving force behind the growing demand for broadband connections, and this has made it more attractive for alternative network providers, such as cable and electricity companies, to enter the telecom business.

It is, however often difficult to draw a sharp distinction between these three different kinds of impact, as the same technology may affect market structure and regulatory needs in several different ways simultaneously. However, it is necessary to analyze the technology impact on the overall market structure before the implications for specific regulation areas can be discussed.

Figure 1: Direct and indirect regulatory implications